Misallocation inefficiency in partially directed search

• 成果类型: Article
• 署名作者: Rabinovich, Stanislav; Wolthoff, Ronald
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University of North Carolina School of Medicine; University of Toronto
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2022.105559
• 发表日期: 2022
• 关键词: Directed search; Random search; labor markets; Minimum wage; misallocation; market power

摘要

We identify a misallocation inefficiency in search models, which is distinct from the aggregate entry dis-tortion emphasized in the previous literature, and arises instead from partially directed search. We consider a framework in which workers differ in whether they can direct their search, and firms are heterogeneous in productivity. The main result is that too many workers apply to high-productivity firms, relative to the social optimum. This occurs because too many firms attract only random searchers, in order to extract more surplus from them. Because it is the low-productivity firms that do so, this induces all the directed searchers to concentrate at the high-productivity firms. A minimum wage can increase employment and welfare by reallocating workers across firms. With endogenous entry by either workers or firms, the misallocation in-efficiency coexists with a standard entry externality; in this case, a proper combination of a tax or subsidy and a minimum wage can restore the efficient allocation.(c) 2022 Elsevier Inc. All rights reserved.